Suppose a pharmaceutical company wants to test the effectiveness ...

[Hungry!]

Suppose a pharmaceutical company wants to test the effectiveness of a new drug in curing cancer. Which approach should it use to test whether the new drug is more effective than the existing medicines that are widely used?
 
  What will be an ideal response?

Question 2

When firms accuse competitors of predatory pricing, they almost always use as evidence
 
  A) arbitrarily allocated joint costs.
  B) the disappearance of competitors.
  C) the profits of their competitors.
  D) their own losses.
  E) the gap between price and marginal cost.

[tsternbergh47]

Answer to Question 1

The best way to test the effectiveness of the new drug is to conduct a randomized experiment. An experiment is a controlled method of investigating causal relationships among variables. To check the effectiveness of the drug, the researcher creates a treatment group and a control group from all the patients with cancer. The participants are randomly divided into a treatment group or a control group. The patients in the treatment group receive the new medicine, while the patients in the control group receive the standard existing medication available. The researcher then has to investigate the participants for over a period of time keeping a track of how their health changes. If the participants of the treatment group recover faster than the control group, it can be concluded that the new drug is more effective than the medicines prescribed currently.

Answer to Question 2

A